On May 13, 2020, the U.S. Department of Treasury, Office of Foreign Assets Controls (OFAC), updated its guidance for the North Korea sanctions program, effective immediately. Treasury added additional language to the descriptions for 490 Specially Designated Nationals (SDNs), in particular, to explicitly warn U.S. financial institutions and their subsidiaries about facilitating transactions with these SDNs.
In its press release, the Treasury Department noted that the sanctions updates are intended to "prohibit foreign subsidiaries of U.S. financial institutions from knowingly engaging in transactions with Specially Designated Nationals that have been designated under North Korea-related authorities."
The update is a warning by the Trump administration to foreign subsidiaries of U.S. banks and financial institutions, and the companies that use them, that the administration remains serious and active about enforcing violations of the North Korea sanctions program. Of course, the days are long over for foreign subsidiaries of U.S. banks to protest that they "did not realize" that an entity was North Korean or ultimately owned by North Korean interests.
As Venable analyzed in another recent client alert, OFAC, together with the U.S. State Department and U.S. Coast Guard, also recently issued an interagency sanctions advisory, which focused on illicit shipping and sanctions evasion practices throughout the supply chain. Indeed, a significant portion of that advisory focused on transactions prohibited by the North Korea sanctions program. Together, these developments drive home the fact that North Korea clearly remains a priority focus at OFAC.
If your supply chain involves imports from Asia, it is advisable to carefully review your transactions to ensure your payment streams and shipping lanes aren't vulnerable to any inadvertent involvement with North Korea. If have any questions regarding whether these updates to the U.S. sanctions program against North Korea impact you, please reach out to Venable's International Trade Group.